The Canadian Association of Oilwell Drilling Contractors is predicting a 10 per cent decline in drilling activity in 2015 due to delays in takeaway pipeline construction, lower commodity prices and uncertainty surrounding B.C.’s nascent LNG export industry.

The association that represents the companies that own the drilling rigs said Thursday it expects Canadian land-based rigs will drill 10,354 wells in 2015, down from its expected 10,847 wells by the end of this year.

President Mark Scholz said the association is assuming a benchmark New York oil price of $85 US per barrel — its forecast finalized a couple of weeks ago would likely have been for more of a decline if it had known the price was heading still lower.

“If we stay in the $75 or lower brackets, this forecast is going to have to be revised and it will have to be revised in a downward fashion,” he said.

Three weeks ago, the Petroleum Services Association of Canada — which represents oilfield services companies other than drillers — predicted an almost seven per cent drop in the number of wells next year to 10,100, down by 730 from this year’s anticipated total.

Longer horizontal legs and more complicated drilling techniques have allowed the industry to maintain earnings with a lower well count in recent years but Scholz said that’s not going to be the case next year. The CAODC expects 119,600 operating days for contractors, down 10 per cent from 133,000 days this year.

In a report last week, services analyst Michael Harvey of RBC Dominion Securities said a total of 14,098 wells had been licensed in the Western Canadian Sedimentary Basin so far in 2014, up about one per cent from the same period of 2013. A license indicates an intention to drill in future, while the CAODC counts completed wells that are on production.

RBC reported the target formations with the most licenses were the Viking of eastern Alberta/western Saskatchewan at 1,616 wells and the Montney of northwestern Alberta/northeastern B.C. with 1,591 wells.

About 20 liquefied natural gas export terminals worth billions of dollars have been proposed for east and west coasts in Canada but none have been sanctioned by their proponents. The British Columbia government has announced a fiscal framework but there remains uncertainty on aboriginal consultations and on the cost of environmental standards the province is hoping to reach.

If the uncertainties are removed and some projects are approved, Scholz said the rig count in B.C. could quickly triple as companies rush in to build capacity to supply the facilities.

Similarly, if uncertainty surrounding pipeline projects such as Keystone XL, Energy East and Northern Gateway is removed, activity would be expected to rise, he said.

CAODC said each active rig generates between 135 and 200 direct and indirect jobs. It predicts that rig utilization will average 61 per cent in the first quarter, 19 per cent in the second quarter, 41 per cent in the third quarter and 46 per cent in the fourth quarter.

The CAODC registered fleet will begin 2015 with 809 rigs and is expected to grow to 813 rigs by year-end.

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